Aircraft Markets In An Age Of Extremes

Transcription

1 Aircraft Markets In An Age Of Extremes Aviation Industry Overview And Forecast Presentation To AGMA/ABMA 213 Annual Meeting Carlsbad, CA By Richard Aboulafia Vice President, Analysis Teal Group Corporation April 213

2 Jetliners Are A Serious Anomaly Aircraft Markets, Through Good And Bad Years Worldwide Deliveries By 13 $ CAGR CAGR Change Change Value (in 212) Large Jetliners ($88.1 b) 7.4% 12.% 57.4% 29.4% Business Aircraft ($19.9 b) 17.1% -6.3% -22.9% 5.7% Regionals ($6.2 b) 4.4% -9.6% -33.2% -12.6% Civil Rotorcraft ($4.9 b) 17.2% -5.4% -15.2% 7.6% Military Rotorcraft($14.7 b) 8.9% 13.% 62.9% 6.6% Military Transports ($6.2b) 3.1% -2.% -7.7% -12.5% Fighters ($14.3 b) 1.9%.5% 2.1% -13.8% All Civil ($118.9 b) 9.7% 5.2% 22.6% 2.4% All Military ($36.7 b) 3.7% 3.8% 16.2% -7.6% Total ($155.6 b) 8.% 4.9% 21.1% 12.4%

3 Civil And Military Aircraft Deliveries (Market Value in 213 $ Bns) 3-8: 59% (9.7% CAGR) 8-12: 22.6% (5.2% CAGR) : 16.2% (3.8% CAGR) 2 3-8: 19.7% (3.7% CAGR) '89 '9 '91 '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 Civil Military

4 Military And Rotorcraft

5 DoD Investment, O&M Funding Upsides: Asia Pivot, Iran. Downside: Sequestration ($ bns) Pre-OCO; pre-sequestration FY1 FY3 FY5 FY7 FY9 FY11 FY13 FY15 FY17 Budget Authority Procurement RDT&E O&M

6 A Weak DoD Weapons Investment Cycle Source: Capital Alpha Partners

7 4 DoD Tactical Aircraft Procurement, FY1986-FY213 Worst Recapitalization Ever (Units Procured) (Funding in '12 $Bns) FY86 FY88 FY9 FY92 FY94 FY96 FY98 Units FY FY2 Funding FY4 FY6 FY8 FY1 FY12 FY13

8 Source: DoD Selected Acquisition Reports/American Enterprise Institute

9 8 Fighter Market: Solid Demand Export, Domestic Orders Staying Strong (Units Delivered) (Market Value in '13 $Bns) '91 '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 Units Value

10 World Fighter Markets: Domestic V. Export $4 (Value of deliveries in '13 $Bns) 199: Exports are 25.4% of the market $3 $2 1998: Exports keep the market afloat with 71.8% of the market 212: Exports are 34.9% of the market $1 $ '9 '91 '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 Domestic Markets Export Markets

11 Highest Value Fighter Programs: History and Forecast F-35 Undetermined Su-27/3/T-5 Eurofighter Rafale F/A/EA-18 F-16 F-15 Cumulative US '13 $Bns Value MiG-29 A/ T-5 LCA Gripen $ $15 $3 $45 $6 $75 $9

12 World Fighter Production Shares 24 (Share By '13 $bns Value) '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 '2 '21 '22 F-35 Undetermined Europe Russia RoW Non-F-35 US

13 Highest Value Undetermined Fighter Competitions Cumulative US '13 $ Bns Value Through 222; Red Bars Are F-35-Addressable; All Others Exclude F-35 India (Rafale selected) South Korea UAE Canada Brazil Kuwait Austr al i a Malaysia Greece Qatar $ $3 $6 $9

14 F-16 Deliveries: USAF And Export '89'9'91'92'93'94'95'96'97'98'99''1'2'3'4'5'6'7'8'9'1'11'12 USAF Export

15 Military Transport Deliveries By Value (Value In '13 $Bns) '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 '2 '21 '22 C-17 C-13J A4M KC-39 Other

16 World Trainer/Light Attack Market Shares Excludes T-5; High End In Balance With T-X 2.5 (Share By '13 $bns Value) '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 '2 '21 '22 Props Jets T-X

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19 Key Rotorcraft Markets Military Lift Is Majority Of Demand $2.5B 12.% $1.1B 5.5% $1.B$.7B 5.7% 3.8% $2.6B 14.9% $9.5B 45.8% $2.8B 13.3% $8.B 45.% 213 $4.8B 23.4% (213 $) 222 $5.4B 3.6% Scout/Attack Naval/ASW Tiltrotor Other Military Transport Civil (non-tiltrotor)

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23 World UAV Market (Units delivered, 's) (Market value In '13 $bns) '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 '2 '21 '22 Units Value Includes UCAVs; excludes R&D.

24 Missile/Munition/UAV Forecast 2 (Market value in '13 $Bns) '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 '2 '21 '22 AAM ASM ADM ATM Anti-Ship SSM Smart munitions UAVs

25 The Commercial Market

26 Our Forgotten Nemesis...Cyclicality Large Jetliner Deliveries By Value (Value in '13 $Bns) $8 $ % CAGR % CAGR $4 $2 $ % CAGR; -65% peak-trough % CAGR % CAGR; -45% peak-trough % CAGR; -41% peak-trough % CAGR; -28.8% peak-trough OR % CAGR; -37.3% peak-trough '59 '63 '67 '71 '75 '79 '83 '87 '91 '95 '99 '3 '7 '11 '12

27 GDP Year/Year Growth Rates 1% 8% 6% 4% 2% % -2% -4% '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 13f'14f World EU US Asia Ex-Japan Source: Morgan Stanley, IMF W orld Economic Outlook January 213

28 Y/Y Traffic: Recovery Stalls; Cargo A Concern 212 Totals; RPKs 5.3%, ASKs 3.9%, FTKs -1.5%; 211: RPKs 6.9%, ASKs 8.2%, FTKs -.6% 3% 2% 1% % Jul '8 SepNov Jan '9 Mar May Jul Sep Nov Jan '1 Mar May Jul Sep Nov Jan '11 Mar May Jul Sep Nov Jan '12 Mar May Jul Sep Nov Jan '13 Feb -1% -2% Source: IATA RPKs ASKs FTKs

29 Historical Jetliner Orders And Deliveries 3 (Number of aircraft) '69 '71 '73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '1 '3 '5 '7 '9 '11 '13f Deliveries Net orders All Airbus and Boeing aircraft

30 Oil Prices And Large Jetliner Deliveries 12 (Oil Prices/bbl in '12$) (Value of Deliveries in '13$ Bns) '8 '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 Oil Prices Value US Energy Information Agency (Annual Average Imported Crude Oil Price in 212 $); Teal Group research

31 Interest Rates And Large Jetliner Deliveries (Interest Rates) (Value of Deliveries in '13$ Bns) 15% 8 1% 6 4 5% 2 % '8 '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 Interest Rates Value Federal Reserve (Federal Funds Effective Rate); Teal Group research

32 Oil Prices And Interest Rates 12 (Oil Prices/bbl in '12$) (Interest Rates) 2% % 6 1% 4 5% 2 % '8 '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12f Oil Prices Interest Rates

33 Jetliner Segment Deliveries Single Aisles--Two Families--Were 46% Of 212 Deliveries, 54% Of Deliveries (Deliveries By Value In '13 $bns) '73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '1 '3 '5 '7 '9 '11'12 Single Aisle 2/3 3/4 4+ Mainline only

34 Do You Believe In Super Cycles? History And OEM Plans For Large Jet Transport Deliveries By Value (Value in '12 $ Bns) $1 $8 $6 $ % CAGR 184.3% Growth % CAGR 112.7% Growth % CAGR, 175.1% Growth; % CAGR $2 $ '59 '63 '67 '71 '75 '79 '83 '87 '91 '95 '99 '3 '7 '11 '14f

35 Commercial Jetliners History And Forecast Dangerous Words: It Really Is Different This Time 1,4 (Units Delivered) (Market Value in '13$ Bns) To Drop SA Rates Or Drop Prices? 12 1,2 1 1, '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 '2 '21 '22 Units Value Airbus, Boeing, CSeries, C919 only; includes KC-46

36 Comparative Backlog Values (Value in '13 $Bns) Mid '97 Mid '1 End '4 End '5 End '6 End '7 End '8 End ' End '1 End '11 End '12 Boeing Airbus Bombardier

37 Jetliner Programs: The Importance Of Volume A318-21/neo 737/737Max /777-X A35 XWB A33/KC-3 A38 747/ /KC-767 Cumulative Deliveries Value in 13 $ Bns CSeries $ $5 $1 $15 $2

38 1 Market Share Outlook By Deliveries Value (Value in '13 $Bns) The Duopoly Endures '78 '8 '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 Boeing Airbus Douglas/Lockheed Bombardier/COMAC

39 Regional Market: A History of Crashing Waves $1 (Value of deliveries in '13$ Bns) $8 '61 '63 '65 '67 '69 '71 '73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '1 '3 '5 '7 '9 '11 '12 $6 $4 $2 $ 19/37-seat Props 38/72-seat Props 3/5-seat Jets 6/18-seat Jets

40 Regional Market Entrances Possible; Exits More Common $1 (Value of deliveries in '13$ Bns) $8 $6 $4 $2 $ '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 '14 '16 '18 '2 '22 Bombardier Embraer Other ATR Saab BAE Fokker MRJ SuperJet

41 Business Aircraft

42 Business Aircraft Deliveries And Corporate Profits (Corp. Profits in $ Bns) (Deliveries -'13 $Bns) 2, ,5 2 1, '64 '66 '68 '7 '72 '74 '76 '78 '8 '82 '84 '86 '88 '9 '92 '94 '96 '98 ' '2 '4 '6 '8 '1 '12 Corporate Prof its Value of Deliv eries Source: US BEA, Teal Group Research

43 Bottom Half Bizjet Segment V. Top Half 14 (Market Value in 213 $ Bns) CAGR: 19.7% Bottom, 15.3% Top 8-12: -55.9% Bottom, 12.3% Top : -55.7% Bottom, 2.8% Top 2 '89 '9 '91 '92 '93 '94 '95 '96 '97 '98 '99 ' '1 '2 '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 Bottom Half (<$26M) Top Half (>$26M)

44 Used Jet Availability Still Digging Out 24 (Number of aircraft) /95 12/97 12/99 12/1 12/2 12/3 12/4 12/5 12/6 12/7 12/8 12/9 6/1 12/1 3/11 6/11 1/11 3/12 6/12 9/12 12/12 Source: AMSTAT/Bank of America Light Medium Heavy

45 Business Aircraft Market By Class Balance Shifting Towards Larger Aircraft $4 ('13$ Billions) $3 $2 $1 $ '3'4'5'6'7'8'9'1'11'12'13'14'15'16'17'18'19'2'21'22 Very Light Entry Lev el Mid-Sized Super Mid-Sized Large Very Large Ultra Jetliners+RJs Turboprops

46 Top 2 Aviation Programs: Volume Matters Airbus A32/Neo Boeing 737NG/MAX Boeing 787 Boeing 777 Lockheed F-35 Airbus A35XWB Airbus A33 Bombardier Global Embraer E-Jets Boeing 777-X Boeing 747 Airbus A38 Sikorsky H-6 Gulfstream 65 Airbus A4M Boeing 767/KC-46 Gulfstream 55 Lockheed C-13J Gulfstream 45/P42 Eurofighter Cumulative Deliveries Value in 13 $ Bns $ $6 $12 $18 $24

47 Market What Happens Next Change CAGR Comment Large Jetliners -.1% 2.4% Tough to keep growing at current rate Business Aircraft 12.5% 9.8% Big structural change Regionals 18.2% -2.4% Recovery, but still not a great market Civil Rotorcraft -4.2% 5.8% Strong recovery Military Rotorcraft 11.6% -1.9% Watch the curve Fighters 2.7% 4.2% Gradual F-35 ramp-up Military Transports -1.1% 7.1% C-13J, A4M grow All Civil 3.3% 3.8% See jetliners, above All Military 9.2% 3.% Strong except rotors Total 4.6% 3.6% No bust, less boom

48 Aircraft Production Largely Sheltered From The Storm; Long-Term Growth, Too 2 (Market Value in '13 $ Bns) '3 '4 '5 '6 '7 '8 '9 '1 '11 '12 '13 '14 '15 '16 '17 '18 '19 '2 '21 '22 Fighters Business Aircraft Rotorcraft MilitaryTransports/Trainers/Other Jetliners/Regional AC